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Opinion Contributor

Caymans are just tip of the iceberg

We need to enforce stricter regulations of international finance, the author writes. | AP Photo

By SALLY PAINTER | 8/9/12 4:29 AM EDT

The placid political waters of the Cayman Islands were roiled recently by an unprecedented announcement. Premier McKenna Bush instituted an expatriate-only payroll tax of 10 percent — immediately sparking an outcry among the wealthy people and international corporations that have built the Caymans’ massive financial sector on the premise of a tax-free paradise. More than 9,000 mutual funds, 260 banks and 80,000 companies are now based on an island of roughly 54,000 people.

While this move is rooted in the island’s budget wrangling with London, it comes just as such “offshore financial centers” are under increasing scrutiny for their role in an international financial system tainted by suspicion and scandal. From tax dodging to money laundering, from shady derivatives trading to the manipulation of the LIBOR rate, the lack of transparency and effective regulation in world finance has led to serious problems.

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In U.S. politics, places like the Cayman Islands have emerged as rhetorical weapons for campaign attacks on the evils of corporate tax evasion and outsourcing. President Barack Obama has long made clamping down on offshore tax havens a priority, regularly citing the issue in the 2008 race and, once elected, promoting aggressive tax code changes to reduce U.S. companies’ ability to shelter profits from taxes by keeping them overseas.

Now, of course, the Obama campaign has pounded former Massachusetts Gov. Mitt Romney for his Cayman Island accounts, using them to attack what many see as a culture of unscrupulous selfishness among a global elite. Combined with persistent questions about Romney’s refusal to release his tax returns, the implied charges of shady financial dealings could add up to a potent character weakness for his campaign.

However, since the Cayman’s new tax only targets wages, it would leave the passive investments and corporate profits of the super-rich, like Romney, untouched. And this is really where the action is. Between $21 billion and $32 trillion is hidden offshore each year, the watchdog group Tax Justice Network estimates, meaning nearly $200 billion of lost government taxes annually.

These lost revenues, however, are just the tip of the iceberg of an international financial system that has grown so sprawling, complex and secretive that regulators face a near-impossible task. That’s the way many financial players – legitimate and otherwise – want it.

Not only do criminal enterprises benefit from no-questions-asked banking. But international corporations take advantage of it to streamline global operations with a minimum of red tape. These multinationals lobby against greater regulation — arguing that these liberties grease the wheels of international trade and promote growth.

They may have a point – but it has a dark side. As tax evasion and other white-collar crimes sap government revenue, this lack of transparency also facilitates money laundering, terrorist financing and political corruption.

Indeed, money laundering is the linchpin of the criminal universe. Without it, the billions generated by drug sales, human trafficking and the like would be trapped in the unwieldy form of cash. But once it enters the global financial system – whether through the fabricated profits of shell companies or unmonitored deposits – it becomes infinitely more useful. It can be used to pay suppliers, manage international criminal supply chains, fund preferred politicians and make legal investments in legitimate activities — that then get funneled back into the original criminal enterprise.

"To end this kind of impunity, there must be a shift in fundamental values. Bankers who participate in laundering have to realize that they cannot escape, for example, some responsibility when that money buys the assault weapons used to massacre civilians in Mexico...."

Um, this administration, not bankers, set up those gun sales to discredit the second amendment... along a border that has been purposely left open to undercut wages with an endless supply of cheap laborers... Drugs, sex slaves, Democrat voters, and dead Mexican civilians are side effects.

Yeah, we get the real message: highly successful people are bad and Obama is going to put a stop to it.

Why does hiding your money in the Cayman's deserve such respect from the republicans and the tea party? Is this the kind of action that the founders would have respected?

Wealthy Americans and large corporations move in circles that have no country allegiance and the founders would have ignored these entities of self-promotion and considered them as anti-American but still protected under our Constitution.

Split/reduce/clean up the banks and financial system that enables all of this secrecy, gut the tax code that encourages this no country allegiance, and provide real support and respect for the people and businesses that invest in our country.

Of course, Romney is one of these elitists that has no country allegiance.

Really tired of the level of corruption and dishonesty in politics and corporations in America. And the republicans are protecting the worst of the bunch and demand further deregulation of our already corrupted business culture at a time when we need executives and boards to go to either go to prison or find their integrity to America.

Looks like the Ayn Rand cultists are out in force with their inane fantasies about "movers and shakers." Maybe one day they'll reach an adult understanding of economics. In the meantime, they'll continue being the useful idiots of the far-right portion of the top 0.1%.

Sure sonny boy ! That is why the Keynesians have run up a funded and unfunded debt of $125 Trillion that will never be paid. That is why the purchasing power of the FERN, Federal Reserve Note has lost 30% just since 2000. Yeah you Keynesians sure are mature. You have through debasing a once envied currency since the 1930s destroyed the wealthy foundation of this nation and put us on the road to complete serfdom and a draconian Police State.The Keynesian foolishness is a form of government theft for those parasites who produce nothing.

"More than 9,000 mutual funds, 260 banks and 80,000 companies are now based on an island of roughly 54,000 people."

Granted Republicans never mention Bush-Cheney anymore, not in 2010 or 2012, or welcome them at their convention. They also NEVER mention that under Bush-Cheney five million manufacturing jobs were shipped overseas or to Mexico. Also under Bush-Cheney there was a run on offshore accounts as thousands of corporations moved their assets offshore or overseas or to hidden Swiss bank accounts to avoid federal taxes and cheating America of badly-needed revenues. Romney, now the GOP's candidate, has shown by just the one tax record he has relaesed that he and his tax experts and 468+ page tax returns are masters of exploiting the GOP-created tax loopholes for the rich that allowed him to declare his huge Bain Capital salary as "carried interest" taxed not at 35% but 15% or his idle rich wealth at the reduced dividend rate also of 15%, throw in the offshore, overseas, Swiss bank account (which Romney tried to hide, but ferreted out by the Boston Globe forcing Romney to amend his presidential campaign application) and Romney had a 13.9% sweetheart tax rate saving him millions.

The Republicans love to wail how corporations in America pay the highest tax rates, yet never mention that few large corporations ever pay the top rate and, in fact, mega companies like GE, AT&T, Exxon-Mobile, etc. pay no federal taxes and even companies considered progressive like Apple pay 8% notb 35% using a complicated financial slight-of-hand manipulation of assets spread out not in Cupertino, Calif. their home office but to Reno, Nev. and countries overseas. Tech companies, banks, drug makers, etc. are particularly adept at the quick movement of mobile assets.

Even conservative bankers and Wall St. media, recognizing the shortfall of revenue compounded by the GOP-Phil Gramm-crafted subprime mortgage Wall St. fraud scandal meltdown and lost of state and federal revenues are now proposing a tax amnesty to bring untaxed US money back to the US. They don't mention that the ploy was used under Bush-Cheney whereby corporations got a super low tax rate to bring back money and instead of reinvesting that windfall in their companies, to hire more people, to increase salaries or to pass the money on to investers most of the money was distributed among the companies' executive elites and still more companies were encouraged to move assets offshore.

By now, even the dullest, most bigoted working class American should realize that the Republican Party has NEVER represented the working class. Today's extremist GOP have never been more pro-rich, anti-poor, anti-worker, and anti-America. You don't hear Republicans calling for a ban or restrictions on offshore accounts. You don't hear them touting, "Buy American," or pushing a return of jobs from overseas. They are profit-driven, not patriotic. Surprise, God knows all about it.

"More than 9,000 mutual funds, 260 banks and 80,000 companies are now based on an island of roughly 54,000 people."

Granted Republicans never mention Bush-Cheney anymore, not in 2010 or 2012, or welcome them at their convention. They also NEVER mention that under Bush-Cheney five million manufacturing jobs were shipped overseas or to Mexico. Also under Bush-Cheney there was a run on offshore accounts as thousands of corporations moved their assets offshore or overseas or to hidden Swiss bank accounts to avoid federal taxes and cheating America of badly-needed revenues. Romney, now the GOP's candidate, has shown by just the one tax record he has relaesed that he and his tax experts and 468+ page tax returns are masters of exploiting the GOP-created tax loopholes for the rich that allowed him to declare his huge Bain Capital salary as "carried interest" taxed not at 35% but 15% or his idle rich wealth at the reduced dividend rate also of 15%, throw in the offshore, overseas, Swiss bank account (which Romney tried to hide, but ferreted out by the Boston Globe forcing Romney to amend his presidential campaign application) and Romney had a 13.9% sweetheart tax rate saving him millions.

The Republicans love to wail how corporations in America pay the highest tax rates, yet never mention that few large corporations ever pay the top rate and, in fact, mega companies like GE, AT&T, Exxon-Mobile, etc. pay no federal taxes and even companies considered progressive like Apple pay 8% notb 35% using a complicated financial slight-of-hand manipulation of assets spread out not in Cupertino, Calif. their home office but to Reno, Nev. and countries overseas. Tech companies, banks, drug makers, etc. are particularly adept at the quick movement of mobile assets.

Even conservative bankers and Wall St. media, recognizing the shortfall of revenue compounded by the GOP-Phil Gramm-crafted subprime mortgage Wall St. fraud scandal meltdown and lost of state and federal revenues are now proposing a tax amnesty to bring untaxed US money back to the US. They don't mention that the ploy was used under Bush-Cheney whereby corporations got a super low tax rate to bring back money and instead of reinvesting that windfall in their companies, to hire more people, to increase salaries or to pass the money on to investers most of the money was distributed among the companies' executive elites and still more companies were encouraged to move assets offshore.

By now, even the dullest, most bigoted working class American should realize that the Republican Party has NEVER represented the working class. Today's extremist GOP have never been more pro-rich, anti-poor, anti-worker, and anti-America. You don't hear Republicans calling for a ban or restrictions on offshore accounts. You don't hear them touting, "Buy American," or pushing a return of jobs from overseas. They are profit-driven, not patriotic. Surprise, God knows all about it.

"More than 9,000 mutual funds, 260 banks and 80,000 companies are now based on an island of roughly 54,000 people."

Granted Republicans never mention Bush-Cheney anymore, not in 2010 or 2012, or welcome them at their convention. They also NEVER mention that under Bush-Cheney five million manufacturing jobs were shipped overseas or to Mexico. Also under Bush-Cheney there was a run on offshore accounts as thousands of corporations moved their assets offshore or overseas or to hidden Swiss bank accounts to avoid federal taxes and cheating America of badly-needed revenues. Romney, now the GOP's candidate, has shown by just the one tax record he has relaesed that he and his tax experts and 468+ page tax returns are masters of exploiting the GOP-created tax loopholes for the rich that allowed him to declare his huge Bain Capital salary as "carried interest" taxed not at 35% but 15% or his idle rich wealth at the reduced dividend rate also of 15%, throw in the offshore, overseas, Swiss bank account (which Romney tried to hide, but ferreted out by the Boston Globe forcing Romney to amend his presidential campaign application) and Romney had a 13.9% sweetheart tax rate saving him millions.

The Republicans love to wail how corporations in America pay the highest tax rates, yet never mention that few large corporations ever pay the top rate and, in fact, mega companies like GE, AT&T, Exxon-Mobile, etc. pay no federal taxes and even companies considered progressive like Apple pay 8% notb 35% using a complicated financial slight-of-hand manipulation of assets spread out not in Cupertino, Calif. their home office but to Reno, Nev. and countries overseas. Tech companies, banks, drug makers, etc. are particularly adept at the quick movement of mobile assets.

Even conservative bankers and Wall St. media, recognizing the shortfall of revenue compounded by the GOP-Phil Gramm-crafted subprime mortgage Wall St. fraud scandal meltdown and lost of state and federal revenues are now proposing a tax amnesty to bring untaxed US money back to the US. They don't mention that the ploy was used under Bush-Cheney whereby corporations got a super low tax rate to bring back money and instead of reinvesting that windfall in their companies, to hire more people, to increase salaries or to pass the money on to investers most of the money was distributed among the companies' executive elites and still more companies were encouraged to move assets offshore.

By now, even the dullest, most bigoted working class American should realize that the Republican Party has NEVER represented the working class. Today's extremist GOP have never been more pro-rich, anti-poor, anti-worker, and anti-America. You don't hear Republicans calling for a ban or restrictions on offshore accounts. You don't hear them touting, "Buy American," or pushing a return of jobs from overseas. They are profit-driven, not patriotic. Surprise, God knows all about it.

Hallaquila-your obsessive behavior regarding an administration that has been out of office for almost four years is laughable and pathetic. The WSJ reported long ago that the wealthiest members of Congress are by a large majority, Democrats. Tend to the the "filthy rich" in your own ranks before you throw too many rocks you leftist hack.

Those of us that read both sides (“Tragedy of the Commons” and “Atlas Shrugged”) understand Why the Caymans IS the Galts Gulch of today. Keep taking and soon enough there will be no more to take. Keep trying to impose YOUR morality (immorality) on all others and soon enough you will either fail or become the ugly dictators...

Notice the disingenuousness of the author, implying that Romney hides his money from taxes (never proven) but fails to include some from the other side of the aisle that ALSO have funds ~hidden~.. Tell the ENTIRE story or be labeled the partisan that this article tends to bring to you..

We won't mention your failure to mention that tax cheat timmy was head of the NY fed during he Libor scandal, what did he know and when did he know it?